A credit card provides you with an agreed amount of credit (your credit limit) that enables you to pay for goods and services, either in a shop, over the phone or online and also to withdraw cash. Any amount you use must be repaid.
Every month you'll receive a statement showing how much you've spent and you decide to pay off the balance you owe in full or in part. Usually, if you pay the balance in full by the due date you won’t be charged any interest. However, if you don’t pay off the full balance, you'll be charged interest at an agreed Annual Percentage Rate (APR).
You can often find attractive introductory and promotional rate offers on credit cards. If you can pay the balance off in full during the introductory period it may be cheaper than other forms of borrowing, and the card may come with other benefits such as cash rewards or commission-free purchases.
You should only spend what you can afford to pay back, and make sure you make at least the minimum payment each month. However, if you only make the minimum payment each month, it will take you longer and may cost you more to clear your balance.
For more information on the different types of borrowing, see our guide to borrowing sensibly.